Tests of Borrower Perceptions in the Adjustable-Rate Mortgage Market: Do Borrowers View ARM Contracts as Distinct?

1994 ◽  
Vol 36 (1) ◽  
pp. 8-22 ◽  
Author(s):  
J. Sa-Aadu ◽  
James D. Shilling
Keyword(s):  
Mortgage Market ◽  
Adjustable Rate ◽  
Adjustable Rate Mortgage

scholarly journals Cause Determination of the Adjustable-Rate Mortgage Market Collapse During the Financial Crisis

2020 ◽  
Vol 12 (11) ◽  
pp. 83
Author(s):  
Ryan P. Wang
Keyword(s):  
Financial Crisis ◽  
Mortgage Market ◽  
Percentage Increase ◽  
Predatory Lending ◽  
Key Factors ◽  
Popular Narrative ◽  
Adjustable Rate ◽  
Adjustable Rate Mortgage ◽  
The Impact

This paper provides insight into what caused the decline of the adjustable-rate mortgage (ARM) market during the 2007–2009 financial crisis. Contrary to common perception, the failure of the ARM market cannot be primarily attributed to predatory lending targeting subprime borrowers from low-credit households. This popular narrative is incomplete and disregards some important factors. I present three key factors that challenge the narrative and point to previously undiscussed sources that may have contributed to the ARM market collapse. First, the accusation of predatory lending does not account for other possible causes of mass ARM defaults. Second, the sole focus on the market’s subprime segment disregards the impact of prime ARMs on the market. Third, the narrative’s citation of subprime ARMs having greater delinquency rates and foreclosure numbers fails to recognize the significant percentage increase in prime ARM failures in the years leading up to the crisis, as well the disparity in typical outstanding balances between subprime and prime ARMs.

Exploring the Role of Financial Disclosure Forms in Mortgage Type Selection

2017 ◽  
Vol 28 (2) ◽  
pp. 285-299
Author(s):  
Travis P. Mountain ◽  
Michael S. Gutter ◽  
Jorge Ruiz-Menjivar ◽  
Zeynep Çopur
Keyword(s):  
Treatment Group ◽  
Federal Reserve ◽  
Group Treatment ◽  
Financial Disclosure ◽  
Fixed Rate ◽  
Type Selection ◽  
The Difference ◽  
Adjustable Rate ◽  
Adjustable Rate Mortgage ◽  
Fixed Rate Mortgage

The purpose of this study was to determine whether using a financial disclosure form in a controlled setting can influence consumers’ mortgage selection. This study used a 2 × 2 experimental design where participants were assigned randomly to a control or treatment group. Treatment group participants received a Federal Reserve Board document that contained information explaining the difference between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage (FRM). All participants were presented with two distinct scenarios and were asked to determine the most appropriate mortgage for each. Logistic regression results suggested that receiving the Federal Reserve Board document does make a difference in consumers’ mortgage choice in hypothetical scenarios. Financial knowledge and Truth in Lending Act knowledge were also were important predictors.

The probability of fixed- and adjustable-rate mortgage termination

1996 ◽  
Vol 13 (2) ◽  
pp. 95-104 ◽  
Author(s):  
Richard A. Phillips ◽  
Eric Rosenblatt ◽  
James H. Vanderhoff
Keyword(s):  
Adjustable Rate ◽  
Adjustable Rate Mortgage ◽  
Mortgage Termination
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